By Pranav Kashyap, Shubham Batra and Khushi Singh
(Reuters) -Britain’s FTSE 100 hit a record high for a fifth straight session on Friday as investors cheered the Bank of England’s dovish tone while the British economy grew more than expected in the first quarter of the year.
The blue-chip FTSE 100 ended 0.6% higher, notching a new peak and breaching the 8,400 mark earlier in the session. The mid-cap FTSE 250 hit its highest level in more than two years and also closed 0.6% higher. Both indexes logged a third consecutive week of gains.
The British economy exited recession with stronger-than-expected growth of 0.6% in the first quarter, the most in nearly three years.
That was faster than the 0.3% first quarter economic growth in the euro zone and the 0.4% in the United States.
“The UK economy erased all of the drag seen in the second half of 2023. Driving the outperformance in growth was a combination of higher government spending, stronger investment, and better trade data,” said Sanjay Raja, Chief UK Economist at Deutsche Bank in a note.
While investors cheered as the Bank of England set the scene for a summer rate cut on Thursday, some economists suggested the stronger GDP growth could delay the Bank’s efforts and stoke inflation.
Industrial metal miners led sectoral gains with a 1.4% rise. Anglo American added 1.4% after the Australian Financial Review reported that Rio Tinto had considered an offer for the miner.
Vodafone Group was up 1.9% after the British government made a final order to conditionally approve the proposed merger between the telecom company’s UK operation and Hutchison’s Three UK.
Rightmove Plc was the biggest faller on the benchmark index, dropping 5.5% after the real estate portal cut its Average Revenue Per Advertiser (ARPA) growth forecast. The broader real estate index lost 1.3%.
(Reporting by Pranav Kashyap, Khushi Singh in Bengaluru; Editing by Mrigank Dhaniwala and Sohini Goswami, Kirsten Donovan)
